Rich claim $260m in childcare tax aid

By Misha Schubert

TAXPAYERS are handing over $260 million each year to subsidise childcare for high-income families, prompting calls for a rethink on the level of generosity.

But women's workforce advocates have warned against making cuts, arguing the subsidy saves money long-term because women who drop out of paid work lose skills and confidence and stop paying taxes.

Families on more than double the average wage are claiming the childcare tax rebate.

More than 65,000 families that earn double the average wage - or more - are claiming the childcare tax rebate.

In past years, Labor considered applying a means test but ruled it out amid fears such a move would cut women's workforce participation.

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But new data reveals the bill to taxpayers of subsidising childcare for wealthier households.

It cost taxpayers $244 million for the childcare rebate and $14.7 million for the childcare benefit for families earning more than $150,000 last year. That is an average of almost $3700 a year to each higher-income family.

Families earning between $30,000 and $60,000 a year still get the biggest slice of taxpayer funds for childcare ($658 million) followed by those earning less than $30,000 ($593 million).

But $1 in every $6 of taxpayer assistance for childcare goes to households earning more than $120,000 a year, and $1 in every $12 to households on more than $150,000.

Australian Council of Social Service chief executive Cassandra Goldie said it was time for a rethink on who received taxpayer help to pay for childcare.

ACOSS wants the means-tested childcare benefit and the non-means-tested childcare tax rebate to be rolled into a single means-tested payment, to direct the funding to families on the lowest incomes.

''In the economic situation we have before us, we need to ensure our financial expenditure is well targeted to those who are most in need,'' she said.

Dr Goldie also cast doubt on the idea that many women from better-off households would drop out of the workforce if their subsidies were axed.

''The factors that influence decisions on who does paid work in these households are complex - the financial implications are only one part of that,'' she said.

Kathleen Swinbourne of the Sole Parents Union also urged a rethink on subsidies for higher income households, but said she did not want them axed. ''All children deserve quality care, regardless of their parents' income, but the hard question is who should pay for that,'' she said.